Business confidence sinks to five-year low in Q3

Confidence dropped by 15 percentage points from the previous quarter.

Soaring costs of doing business and pressure on consumer spending have pushed hospitality leaders’ optimism down to a five-year low, the latest Business Confidence Survey from CGA by NIQ and Sona revealed.

Only 26% of leaders feel optimistic about prospects for their business over the next 12 months, a drop of 15 percentage points from the second quarter of 2025. The number of leaders feeling optimistic about the future of hospitality in general slipped by 5 percentage points to 13%.

This ends two consecutive quarter-on-quarter increases in the tracker in 2025. Leaders’ confidence in prospects for their business is now at its lowest point since October 2020, when the COVID-19 pandemic had decimated trading.

Meanwhile, only 46% of business leaders report a year-on-year increase in their revenue in the third quarter, this is sharply down from 53% in the second quarter. The majority of leaders report either decreased (25%) or unchanged revenue (29%).

The CGA RSM Hospitality Business Tracker—based on a separate sample of hospitality businesses—has indicated broadly flat sales on a like-for-like basis in 2025. Openings of new sites have generated modest total growth, though it has remained below the rate of inflation for most of the year.

A third (32%) of leaders say their profits have decreased year-on-year—more than the 30% who recorded an increase. 11% of leaders operated at a loss in the third quarter of 2025, with only a quarter (26%) holding enough cash reserves to last them a year—the lowest level in years. 6% hold no reserves at all.

Tough decisions on menu prices, staffing and investment

A large majority (85%) of operators raised their prices since measures in the government’s Spring Statement added to the sector’s costs. The average increase in prices is 7.6%—almost double the rate of inflation.

Many leaders have also been obliged to address staffing levels, with more than half (55%) reducing their team numbers and / or the hours available to their staff. The average reduction in hours is 7.3%. Smaller numbers have lowered their spending on employee benefits (23%) and training (19%).

The cost crisis is leading some businesses to retrench in many more ways, including cancellations of investment (53%), reductions in trading hours (36%) and closing sites entirely (21%).

Hospitality leaders are calling for greater government support, with taxes, rates, and labour costs the three urgent priorities.

Around two-thirds of leaders say a VAT reduction for hospitality (70%), a maximum possible discount on rates multipliers (65%) and changes to employers’ National Insurance contributions (65%) are amongst their three most preferred actions from the government. Without more support, the majority of leaders say they would have to cancel investment (69%), increase prices (63%) or make further cuts to staff hours (63%).

High inflation, low consumer confidence and government policy have all combined to weaken hospitality and compromise its immense contribution to the UK’s economic growth and job creation. Christmas trading will hopefully boost the coffers of vulnerable businesses, but the sector will be hoping that the imminent Budget is used to deliver the targeted support that hospitality needs and merits,” Karl Chessell, director - hospitality operators and food, EMEA at CGA by NIQ, said.